140,000-plus drivers sent $60m in compensation checks after Amazon 'stole their tips'
One lucky bod gets $28,000, on average it's a few hundred bucks each
America's consumer watchdog has sent checks totaling nearly $60m to more than 140,000 Amazon drivers who were said to have been screwed out of their tips between 2016 and 2019. The delivery workers have until January to cash them.
The drivers were part of the Amazon Flex program that launched in 2015, and would drop off packages and groceries ordered via the web giant's Prime Now and AmazonFresh services. These contractors were paid $18 to $25 per hour and promised 100 per cent of any tips from customers.
Starting in 2016, Amazon, then under the rule of billionaire biz baron Jeff Bezos, began pocketing the tips, according to a lawsuit brought by the FTC. Amazon did this secretly by introducing “variable base pay,” it was claimed, which involved slashing driver’s pay rate and making up for it by adding the tip on top without notifying anyone.
For example, according to the FTC, if someone was working a one-hour job in a region set at $18 and received a $6 tip from their customer via Amazon's electronic payment system, the driver would still get $18 because Amazon would quietly lower the pay to $12 and top it up with the tip.
Over two and a half years, Amazon used nearly a third of tips to offset its payments to drivers, the lawsuit alleged. Drivers began to notice that their overall earnings had mysteriously dropped. The e-commerce giant offered to cough up $61.7m to settle the case in February, a move that was approved by the FTC in June.
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Now, most of that money will be distributed by the FTC as compensation for Amazon's workers. “The FTC will be sending 139,507 checks and 1,621 PayPal payments to Amazon Flex drivers,” it announced this week.
“Drivers who had more than [five dollars] withheld by Amazon will receive the full amount of their withheld tips. The highest amount going to a single Amazon Flex driver is more than $28,000, while the average amount is $422.”
They were advised to cash the checks by January 7, 2022.
In addition, Amazon is prohibited from "misrepresenting any driver’s likely income or rate of pay, how much of their tips will be paid to them, as well as whether the amount paid by a customer is a tip. Amazon also will be prohibited from making any changes to how a driver’s tips are used as compensation without the driver’s express informed consent."
Amazon did not immediately respond to The Register's request for comment. ®